It's time to set the record straight about tax forms. They're not a hard sell, which is good news for distributors.
"[This] is a myth other distributors would like to keep you believing," said Jim Magdaleno, product manager for Oxnard, California-based TFP Data Systems.
Paul Willard, sales manager for Grand Rapids, Michigan-based Broker Forms, agreed, adding, "A misconception is that they are hard to sell because they're complicated and you need to understand compliance issues to sell effectively."
Of course, tax forms aren't going to sell themselves. Distributors must find ways to stay fresh in the minds of customers during the key months of selling—September through January.
"The tax season has a short window of opportunity with high returns and what you do in preparation in the previous months leading up to it makes the difference that will generate revenues that increase yearly," Magdaleno cautioned.
Print Professional understands a distributor's time is precious, so we tapped the minds of some knowledgeable suppliers. Get on the fast track to an easy sell by following these tips.
1. Know Your Audience
Understand your clientele's needs. David Yost, general manager of Roanoke, Virginia-based InfoSeal LLC, encouraged distributors to do some simple detective work. Start from the beginning and determine the types of forms certain companies will use.
"To accomplish this, distributors should look at their customer base and the form description in the tax form catalogue to know which forms to discuss. For example, banks will need mortgage tax forms, universities will need tuition tax forms, etc.," he said.
InfoSeal has been producing tax forms since 2001, with a specialty in pressure seal formats.
TFP Data Systems has been a compliance partner for tax forms for more than 40 years, with tax product shipping out of various locations across the country such as Pennsylvania, Minnesota, Texas and California. In addition to offering various online services, the company also fulfills requests for pressure-seal products and offers specialty packaging.
Meanwhile, Broker Forms has been involved in the tax forms business for more than 30 years, with a focus on W-2s and 1099s over the last 10 years. Willard mentioned he receives a lot of requests for "sets" of tax forms, where all of the forms (and even envelopes) are included in one easy-to-order set.
"The distributor simply needs to know how many recipients the business has (to dictate the quantity ordered) and if the business needs to file with a state or city (to dictate how many parts to order). They don't need to worry about ordering each form individually," he explained.
2. Partner With a Supplier
Distributors want training and support. Suppliers have access to a large pool of resources that distributors can use to their advantage.
"We [help] in a variety of ways by supplying samples, feed tests, personalized catalogues with the distributor's name, cross reference tools, PDFs of the form and also helping the distributor with free design services for custom applications where we will take the end-user's graphics and update them to IRS guidelines," Yost said. "It takes considerable effort to maintain a working knowledge of IRS regulations, and our support through art and design work has become a valuable resource to the distributor in printing custom tax forms."
He added that the company helps distributors' customers with adjustments to folder sealers on a routine basis if they have purchased the forms from InfoSeal. "It is common that end-user[s] will only be changing construction on their folder sealer for tax forms, and only doing it one time per year can be a challenge for them," Yost observed.
TFP Data Systems offers customized marketing strategies for resellers to help them reach their customers during tax season and to stay fresh in their mind year-round. This includes e-mail blasts, imprinted catalogs, co-marketing arrangements, targeted training and exclusive web-workshops, Magdaleno said.
3. Study the Trends
Exciting things are happening in the tax forms sector. TFP Data Systems President Rick Roddis believes future growth opportunity in this niche can be found through the Internet.
"In 2010, there were over 10 million web searches for tax forms, up from 7.6 million in 2009. Because we are not a direct seller of tax forms, our goal is to enable our resellers to be found on the Internet," Roddis remarked.
To help distributors position themselves as Internet marketers, TFP Data Systems can provide web images and copy for their websites and content to drive SEO (search engine optimization) for their sites.
Furthermore, the company can help distributors provide their end-user customers with the efficiency, convenience and time-saving tactics they need through electronic solutions such as Tax Form Wizard (www.taxformwizard.com) and E-FileforBusiness.com.
Tax Form Wizard is a free online tool for finding the right tax forms in just a few easy steps. End-users can perform a quick search simply by entering the catalog form number. If they don't know the number, they can search by state, type of form (e.g., W-2 or 1099) or the type of printer (e.g., laser or continuous) they use, according to Magdaleno.
E-FileforBusiness.com is an online filing solution that works well for small businesses with 20 or fewer employees. "It is a revenue sharing program. Our partners can load the e-file link onto their site and the customer punches out and does their business. We do the rest and pay our partners 25 percent royalty," Magdaleno explained.
He went on to say, "We offer two [software] solutions: TFP.20.11 for preprinted W-2 and 1099 forms and LaserLink for blank or preprinted forms. Just fill in the forms on the screen and print. Best of all, the software supports a wide range of forms, and it gives the user the ability to create professional forms in-house. Both these titles offer e-File capabilities and free technical service."
Willard pointed to Broker Forms' research in the small business market and said it has driven the company to focus on offering more products that businesses find most useful to help them process 1099s and W-2s in an efficient way. "We're focusing more efforts to online filing, with EZ1099W2.com, which e-files with the government, then automatically prints and mails recipient and payer copies. Users can type in data, or import it from most accounting software," he noted.
Broker Forms also offers a desktop software, Winfiler, which allows users to print W-2s and 1099s on both blank and preprinted forms. "In addition, it offers the ability for the user to electronically file the federal and state copies, as well as have the employee copies printed and fulfilled by us," Willard said.
Even though some businesses are choosing the electronic route, don't discount paper-based forms just yet. While the IRS may be close to reaching some of its e-filing goals, there are other factors to consider.
"The IRS has a goal to have 75 percent of all W-2 files to be done electronically by 2015; currently, they are at 59 percent according to an IRS study made in 2008 to 2009. With the technology that is available, it seems that they may get close to accomplishing that goal," Magdaleno stated. "But even given this fact, consider this, in most cases a paper copy is printed for distribution and/or a file copy. And for every W-2 that is generated the 1099 family of forms is needed by 10 to 20 times greater. That means while a local business with 20 to 30 employees might need 50 W-2 forms, they could require as many as 5,000 1099 forms."
InfoSeal has made a strategic decision to keep paper-based tax forms the most viable option.
"InfoSeal has created a unique value proposition for the distributors to provide solutions which will allow paper-based forms to be the answer for years to come. By partnering with a company that promotes advertising on tax forms, InfoSeal has created a $5/M stock product for the most popular tax forms," Yost announced. "Distributors, by consulting with their regional sales manager, can turn tax forms into a profit center for end-users. It is hard for electronic forms to compete with this solution. The ability to offer just one customer forms off the shelf with the advertising pre-sold at these low price levels is a strong opportunity for the distributor."
Willard believes savvy distributors will make the most of both options. "Businesses have been saying for 20 years that paper is becoming obsolete, and it's still around today, so the migration is slow. There is still a lot of opportunity to sell paper, as well as for distributors to position themselves to capture the businesses moving to electronic filing and distribution of tax forms," he noted.
4. Cross Promote
Finally, why stop with tax forms when they can lead to other opportunities? Every year, InfoSeal sees a strong surge in folder sealer sales for processing tax forms. "Once the distributor has sold the folder sealer, it becomes an opportunity to convert other applications on pressure seal, which have improved margins and less competition," Yost mentioned.
Willard agrees that tax forms are a great way to build business with existing customers, and reminded distributors to sell envelopes for secure delivery. "Even if a business doesn't mail out the forms, and instead hand delivers them to employees, they still need to ensure privacy and security of the sensitive financial information printed on the forms," he concluded.